Finance Minister Mr. P. Chidambaram has himself pointed out at more risks in the cooperative banks system.
According to him, the innumerable cooperative banks in India act as breeding grounds of illegal money laundering practices.
Initially there were just handful urban cooperative banks (UCBs) in urban & semi-urban areas. However, currently there are 1,645 UCBs across the country, with more than 8,150 branches. These have Rs. 2 trillion (Trillion = one lakh crore) worth of deposits and advances to the tune of Rs. 1.3 trillion.
Given the size of their operations strict regulatory control is a must. However, the key problem is duality of control. The RBI controls just the depositing and lending practices.
Bulk of the functions of the UCB's are government-controlled through the multi-state cooperative societies. Thus the leakage of governance and regulatory oversight has led to poor health of the UCBs.
It is time that the RBI takes a serious note of the problem, consolidates the operations of UCBs and shuts down fraudulent ones.
No comments:
Post a Comment